a. Use the high sales estimate and data in Table 19.12 to determine the level of external financing needed if short-term and long-term investments were held at their 2018 levels.

b. Using the high sales estimate and data in Table 19.12, do you think it is more likely that Starbucks would use short-term or long-term debt if external financing needed was $3 billion? What financial data support your answer?

Table 19.12

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TABLE 19.12 Current assets Cash and cash equivalents Short-term investments Accounts receivable Inventory Prepaid expenses Total current assets Fixed assets Long-term investments Prop., plant and equip., net Other assets Total fixed assets Goodwill and intangibles Total assets Current liabilities Accounts payable Accrued expenses Other current liabilities Total current liabilities Long-term debt Other long-term liabilities Total liabilities Starbucks Corporation Partial Pro Forma Balance Sheet, 2018 ($ in 000,000s) 2018 Percent of Sales Total stockholder equity Total liabilities and equity External financing needed: $8,756.3 $ 181.5 $ 693.1 $ 1,400.5 $1,462.8 $12,494.2 $ 267.7 $ 6,263.8 $ 546.9 $ 7,078.4 $4,583.8 $24,156.4 $ 1,179.3 $ 2,298.4 $ 2,206.5 $5,684.2 $ 9,090.2 $ 8,206.2 $22,980.6 Shareholder equity Paid-in capital & other equity ($ 281.6) Retained earnings $ 1,457.4 $ 1,175.8 $24,156.4 35.4% .7% 2.8% 5.7% 5.9% 1.1% 25.3% 2.2% 18.5% 4.8% 9.3% n/a n/a n/a n/a n/a 2019 (High Est.) $ 9,953.8 $ 206.3 787.9 $ 1,592.0 $1,662.8 $14,202.8 $ 304.3 $ 7,120.4 $ 621.7 $8,046.4 $ 5,210.7 $27,459.9 $ 1,340.6 $ 2,612.7 $ 2,206.5 $ 6,159.8 $9,090.2 $ 8,206.2 $23,456.2 281.6) $ 4,139.5 $3,857.9 $27,314.1 $ 145.8 Change 2019 (Low Est.) $1,197.5 $ 24.8 $ 94.8 $ 191.5 $ 200.0 $1,708.6 $ 36.6 $856.6 $74.8 $968.0 $ 626.9 $3,303.5 $161.3. $314.3 $ 0.0 $ 475.6 $ 0.0 0.0 $ 475.6 $ 0.0 $2,682.1 $2,682.1 $3,157.7 $ 145.8 $ 9,217.0 $ 191.0 729.6 $ 1,474.2 $ 1,539.8 $13,151.5 $ 281.8 $ 6,593.3 $ 575.7 $ 7,450.8 $ 4,825.0 $25,427.3 $ 1,241.3 $ 2,419.3 $ 2,206.5 $5,867.2 $9,090.2 $ 8,206.2 $23,163.6 ($ 281.6) $ 3,941.0 $ 3,659.4 $26,823.0 ($ 1,395.7) Change $460.7 $9.5 $36.5 $73.7 $77.0 $657.3 $14.1 $329.5 $28.8 $372.4 $241.2 $1,270.9 $ $62.0 $120.9 0.0 $183.0 0.0 0.0 $183.0 0.0 $2,483.6 $2,483.6 $ 2,666.6 ($1,395.7)